Wellington City Quarterly economic monitor - March 2019

Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
1.8%
2.0%
2.5%
Traffic flow
1.8%
2.7%
0.6%
Health Enrolments
1.8%
1.7%
1.7%
Consumer spending
2.6%
4.1%
4.1%
Residential consents
14.6%
5.9%
10.0%
Non-residential consents
1.5%
-2.9%
7.6%
House prices*
5.4%
5.8%
1.3%
House sales
-2.5%
-2.0%
1.6%
Guest nights
0.6%
1.8%
0.6%
Tourism expenditure
6.7%
6.3%
3.3%
Car registrations
-8.0%
-5.3%
-7.6%
Commercial vehicle registrations
-2.9%
-1.4%
-0.07%
Jobseeker Support recipients
4.1%
5.0%
7.6%
Level
Unemployment rate
4.1%
4.4%
4.3%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Infometrics’ provisional GDP growth estimate for Wellington City slowed to 1.8% for the March 2019 year compared with 2.5% nationally, but there are plenty of positives to be taken from the latest results.

Health enrolments (a broad proxy for population growth) in Wellington City grew 1.8% in the March 2019 year, traffic flows (a measure that closely reflects economic activity) increased 1.8%, electronic card spending on retail purchases was up 2.6%, and tourism expenditure rose 6.7% over the year to April 2019. In the April 2019 year, tourists spent an unprecedented $1,904m in the local economy, and guest nights edged up 0.6% over the March 2019 to top 2.34m for the first time.

The 15% rise in residential consents in the March 2019 year is due mainly to an exceptional second quarter in 2018, but more recent quarters have also seen consents remain reasonably high by historical standards. Growth in residential consents should bring some relief to home buyers. House price growth in the city edged down to 5.4% in the March 2019 year on the back of a 2.5% fall in house sales. Non-residential consents grew 1.5% in the March 2019 year. A 21% fall in non-residential consents for new buildings was offset by a 12% rise in non-residential consents for building alterations.

Wellington City’s unemployment rate edged back down to an annual average of 4.1% for the March 2019, virtually the same as the 4.2% national average. Car registrations in the city fell 8.0% in the March 2019 year and commercial vehicle registrations were down 2.9%, both of which reflect national trends.

Overview of national economy

The economy remains in a holding pattern, with uncertainty increasing the risk of economic paralysis. Global concerns continue to circle, with Brexit, a European slowdown, and the US-China trade war all issues that threaten New Zealand’s export outlook. The Reserve Bank has cut the official cash rate (OCR) to 1.5% in the face of poor business investment, global concerns, and subdued inflation. This leaves the Bank with little ammunition to combat a future unexpected shock. Government spending growth remains slow, restricting the impact of any additional fiscal stimulus. Construction appears to be a bright spot on our outlook, but the labour market presents a more mixed picture, with low unemployment but slowing employment growth.